India’s sovereign credit rating unlikely to be upgraded soon: Morgan Stanley

India’s sovereign debt is currently rated BBB- by most rating agencies. A Morgan Stanley research finds that a rating upgrade would be unlikely in the next one year


Fitch Ratings have a BBB- long-term rating on India, their lowest investment-grade level. India’s sovereign debt is currently rated BBB- by all rating agencies, only Standard & Poor's (S&P) has a negative outlook on India. Morgan Stanley, in its recent report titled ‘The Next India-Fixed Income: From Volatility to Moderation’, does not foresee a rating upgrade in the next 12 months. The report mentions that “While India scores well on such variables as GDP growth and FX reserves/GDP on Morgan Stanley forecasts, it needs to show considerable improvement in inflation, fiscal balance and current account deficit to potentially be upgraded.”

What would it take to improve India’s rating? According to Morgan Stanley, “reforms that target reducing inflation, cutting the fiscal deficit, and encouraging FDI inflows are essential to boosting productivity and improving growth. Addressing these factors is therefore critical for achieving the government’s aim of sustainable and higher growth. If these key areas are targeted effectively, it would not only boost productivity, but also improve the credit rating for the sovereign debt.”


Commenting positively on the regime change, the report mentions that, “The stable political environment that has emerged following the 2014 elections is conducive to rapid implementation of policy reforms. The new administration is making efforts towards containing the fiscal deficit, efficient redistribution of resources, and encouraging private-sector investment – measures we believe will set the stage for India’s real GDP to reach US$5 trillion by FY 2025, averaging a growth rate of 6.75% over the next 10 years”

In an earlier report, Morgan Stanley mentioned that a steady pace of implementation of policy reforms can lay the foundation for India's real GDP to grow at an average of 6.75%, and the economy would pass the $5 trillion mark over the next 10 years. Read more about that report here- The Next India: Opportunities and challenges

India’ growth made a shift downward post the financial crisis. The report mentions that this was “followed by some poor policy choices at home. However, over the past 12 months, we are beginning to see some signs of economic recovery.”

“Following the second stage of India’s economic liberalisation and the FDI reforms initiated in September 2012, we believe foreign investment will be a major contributor to the upsurge in private investment over the next few years,” the report mentions further.

The Reserve Bank of India recently readjusted the debt investment limits for various kinds of foreign investors. It increased the FII debt limit to $25 billion and reduced the long-term foreign investors’ limit to $5 billion. Bond traders expect to see increased trading in government bonds.  

Citing the role of the RBI, the Morgan Stanley report says that, “A shift in the RBI’s monetary policy framework toward inflation targeting would play a significant role in lowering nominal interest rates over time. This monetary policy commitment will have to be accompanied by fiscal prudence and policy reforms to bring inflation structurally lower. This, in turn, will allow for lower funding costs in the economy, although we expect real rates to turn positive with increasing growth over the next few years. Indian government bonds could also benefit from the potential relaxation of foreign investor limits in the bond market.”


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How Green Is Your Home?
Wind energy, solar panels, rainwater harvesting, water recycling and composting: the Date home in Pune is one of the greenest homes in India today
Just look out for the pavanchakki on the roof. You can’t miss it,” said the watchman as he directed me to the house of Dhananjay Date in Pune from the entrance of a gated community. Sure enough, a few lanes later, I was confronted with the sight of a wind turbine whirring away high up on the roof of a spacious bungalow.

I soon discovered that the home that Mr Date has built is, at most times, totally independent of the state electricity grid and has power to spare. That’s just the first thing you notice; but it’s only one in a long list of extraordinary features of what could easily be one of India’s greenest houses. Mr Date has water harvesting and composting in the compound and solar panels of the roof; he recycles all the water that comes out of the house and uses natural light wherever possible. 
Mr Date, country head of the global re-insurance giant Swiss Re, says that when he bought a plot of land in the Rakshak Society (near Aundh) in June 2011, he had no thought of building a green home. The desire to set up an environment-friendly building gripped him only after construction began; he then went the whole hog, trying to use natural energy and to conserve water. And, although the idea of recycling water and generating electricity was an afterthought, the heavy infrastructure required has been seamlessly integrated into the bungalow.

As the decision to go green was made rather late, there wasn’t time for much research. But since acres of land immediately to the west of his bungalow are unoccupied (the land belongs to the Indian Army) and windswept, it seemed an ideal location to explore the possibility of erecting a wind turbine and use the abundant and free natural resource to generate his own electricity. 
What he did was to install a 15-foot tower that stands on a steel base. The steel base is built on top of a structure above the terrace of his two-storied house. A wind turbine is installed on the top of the tower; the entire structure weighs 150kg. The load is distributed by four steel cables with stays that hook deep into the RCC columns of the house. The steel legs of the base are also embedded in the same columns. These precautions are taken to ensure that the turbine does not come loose, given the high wind speed in the area.
The power that is generated is channelled into 24VRLA batteries weighing 900kg placed in a utility room on the ground floor; these will have to be replaced after nine years. An inverter converts the power into AC current that lights up the house and a control panel shows how much power has been generated. 
In addition to the wind turbine, the Date home has the usual solar panels ubiquitous to Pune constructions in order to heat water. 

Between the wind turbine and solar panels, Mr Date’s home generates enough energy to power his two-storied house and all the appliances used inside. However, the air-conditioners (a necessity for Pune’s torrid summers) and an internal elevator, being highly inductive loads, need to be started through regular state electricity supply. But, once started, the power generated by the turbine and solar panels is enough to keep them running.
Let’s get a clearer picture of how much power is generated here. 
The 12 solar panels installed on the roof generate 3.6kW of electricity. The wind turbine generates 1.8kW of electricity, at peak. Put together, this translates to about 20 units (kWH) of electricity generation per day, on a 12-hour cycle. This power is far more than what the Date home requires for its needs; the rest could easily have helped light up the public spaces in his building complex. But, no; Indian laws do not permit him to do so. The power is wasted.
Mr Date is clearly happy with the process of generating his own power for almost a year. “We get to know there is a power cut only when the neighbour’s generator starts up,” he says. It is all running smoothly. Some time in the future, he will need to replace the magnets on the wind turbine.  
The house itself is built with stone walls that are low on maintenance and provide natural cooling during hot days, since stone is a poor conductor of heat. 

For Mr Date and his wife, having an open space around the house for their dogs was an important consideration. So, rainwater harvesting and recycling the water used in the house and composting kitchen waste for garden fertiliser were the obvious next steps making this home even greener.
Rainwater harvesting is a dire need in most parts of India. It is the utterly simple process of trapping rain water by digging soak pits, so that it percolates into the ground and helps recharge the water table instead of washing away into gutter. The depleting water table due to unrelenting exploitation of natural resources can only be tackled when rainwater harvesting is adopted in a big way by people.
Mr Date had opted to channel rainwater into a long soak pit through pipes that have simple screens to act as filters. The soak pit has three chambers. Rainwater collects and settles in the first; when it rises to a certain level, it flows into a second chamber containing sand and gravel that act like a filtration bed. Clean water then flows into a third chamber from which it is pumped into a tank and used to water the garden.
A simple contraption comprising an aluminium pipe connected to a float ball keeps track of the water level in the tank. Harvesting rainwater to help raise the water table is a dire need in most parts of water-starved urban India and certainly in Pune.
Recycling Used Water
All the water used in the house—including that from the kitchen and bathrooms—is first routed into a septic tank built below the house. The tank has three compartments. In the first, a mixture of cow dung and induced natural bacteria (sourced from outside) breaks down the suspended material in the water by a bacterial process.
The sludge settles to the bottom of the pit in the second compartment to allow easy separation. Clear water, which gathers at the top, goes into a third chamber and can be pumped out for use. Mr Date says  professional services are available to help in the rare event of overloading or clogging of the sediment. They use a suction hose to clear the pits into a tanker-truck. 

While the Pune municipal corporation mandates segregation of kitchen waste, the Date home uses it to produce their own fertiliser in a decomposition pit built in the garden.
Although green initiatives, such as rainwater harvesting, segregation of waste and even solar power for heating water, are increasingly mandated in parts of urban India, generating wind energy by individual homes is extremely rare. 
While there is, indeed, a cost attached to all these green initiatives at an individual level, they create important role models and will encourage modern housing societies to initiate ways to preserve the environment. 
Mr Date says he spent around Rs10.82 lakh for the wind turbine, the solar panels, the VRLA batteries, the inverter and a control panel. There were also the infrastructure costs for putting up the structures. But, as he tells his friends, if they are willing to spend a crore of rupees on constructing their home, then spending just over Rs15 lakh on a long-term, trouble-free and eco-friendly solution is worthwhile, especially since he did not need any special permission for installing the wind turbine. In fact, his eco-friendly home is eligible for some tax concessions; but, since he decided to go green rather late, he has not even explored what these are.  
His advice to those who choose the green option is to include hybrid energy in their construction plans from inception. This would help keep costs to a minimum. 




3 years ago

while Sri Date has generated power,harvested rainwater,produced a Green zone on a small scale Smt Savita Narayan has taken the reader on a conducted tour of the project which has generated more interest to emulate these concepts on a mass scale so that a Developer of a housing project can generate and pass on the benifits to the end users.

Narayana K


3 years ago

A good initiative which can be emulated by many which naturally helps all in the long run!

Abhijit Gosavi

3 years ago

Awesome! The govt. should give incentives to people who use green energy!

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